Part XII - Finance & Property • Article

Article 298 Simplified: Power to carry on trade, etc

Article 298 gives the Central and State Governments the legal power to act like commercial entities. It allows them to buy, hold, and sell property, run businesses, and sign contracts. However, if the Union government runs a business in a state on a subject it doesn't normally control, it must follow that state's local laws; and vice-versa.

Official Text

The executive power of the Union and of each State shall extend to the carrying on of any trade or business and to the acquisition, holding and disposal of property and the making of contracts for any purpose: Provided that— (a) the said executive power of the Union shall, in so far as such trade or business or such purpose is not one with respect to which Parliament may make laws, be subject in each State to legislation by the State; and (b) the said executive power of each State shall, in so far as such trade or business or such purpose is not one with respect to which the State Legislature may make laws, be subject to legislation by Parliament.

Simple Meaning

Explain Like Ten

This rule gives governments the power to act like regular business owners. They can buy land, sell old equipment, run bus services, and sign contracts to get things built.

Student Mode

Article 298 (substituted by the 7th Amendment, 1956) expands the executive power of the Union and States to include commercial and proprietary actions: carrying on trade/business, acquiring/holding/disposing of property, and entering into contracts. The power is subject to federal and state legislative divisions.

Example

The Central Government can set up a commercial enterprise like a steel plant (SAIL) or a railway network. Similarly, a State government can buy land to build a public bus terminal, sell old government vehicles, or run state lotteries.

Key Takeaway

Both Union and State Governments have the power to own property, carry on trade or business, and enter into contracts.

FAQs

Can a State Government start a business in another State?

Yes, but its operations in that other state will be subject to the legislative control of Parliament and that other state's laws.

Does the government need a specific law to buy property?

No, Article 298 grants this power directly to the executive branch.

Quiz

Under Article 298, the executive power of the Union and States extends to:

Answer: Trade, business, and owning property

If the Union government carries on a trade in a state on a subject not in the Union List, it is subject to:

Answer: State legislation